{"id":9356,"date":"2023-10-03T03:52:36","date_gmt":"2023-10-03T03:52:36","guid":{"rendered":"https:\/\/ownrblog-preprod.go-vip.net\/?p=9356"},"modified":"2023-12-07T14:06:31","modified_gmt":"2023-12-07T14:06:31","slug":"tax-returns-vs-annual-returns","status":"publish","type":"post","link":"https:\/\/www.ownr.co\/blog\/tax-returns-vs-annual-returns\/","title":{"rendered":"Tax Returns vs. Annual Returns: How Are They Different?"},"content":{"rendered":"

At Ownr, while our bread and butter is business registration, our platform can support entrepreneurs at all stages of their journey. Once you\u2019ve registered your business, you\u2019ll be able to find a whole host of Ownr features that can help you manage and grow your company.<\/span><\/p>\n

Incorporating your business comes with a few perks<\/span>, including potential tax benefits and liability protection. But <\/span>there are responsibilities that come with having a corporation too, and we’re here to make those easier to manage.\u00a0<\/span><\/p>\n

To start, most entrepreneurs believe the corporate tax return is the only annual compliance item required for a corporation. But it’s not! There’s another, equally mandatory, filing to remember, and in most Canadian provinces it\u2019s referred to as the Annual Return. The Tax Return and Annual Return may sound similar, <\/span>but they\u2019re actually different requirements that you\u2019ll submit to separate government agencies.\u00a0<\/span><\/p>\n

Your responsibilities based on your business structure<\/span><\/h2>\n

As a sole proprietor, your business isn\u2019t a separate legal entity from yourself, so, when tax season rolls around, you don\u2019t have to file separate tax returns for your business and yourself.\u00a0<\/span><\/p>\n

As a corporation, a separate Corporate Tax Returns <\/span>does<\/span><\/i> have to be submitted each year, declaring to the CRA (Canada Revenue Agency) how much taxable income a corporation earned that year. Your corporate tax return is filed at your company\u2019s fiscal year end, which, for most companies, is the end of the calendar year.\u00a0 <\/span>To put it simply, the Tax Return informs the CRA of your corporation’s financial position.\u00a0<\/span><\/p>\n

In addition to the Tax Return, Corporations are responsible for filing an <\/span>Annual Return<\/span><\/a>, which informs the government of the legal status of your corporation and confirms this information on the public registry. Your Annual Return is filed on the anniversary of the date on which you incorporated.\u00a0\u00a0<\/span><\/p>\n

The Annual Return confirms that the shareholders and directors have held meetings or prepared the legally-required written resolutions for the previous year.\u00a0 A written resolution is a record of decisions that is signed by all of the members who are entitled to vote, like your company’s shareholder(s).\u00a0<\/span><\/p>\n

Once complete, the Annual Return is submitted to either the federal or provincial government, depending on your jurisdiction, <\/span>which you can easily identify in your Ownr Dashboard under Company Info in the Organization Tab.\u00a0<\/span><\/p>\n

Regardless of the size of your business, through both tax and legal filings, you have to show that your corporation is still operational. These reporting responsibilities are your end of the bargain for the perks that come with incorporating, and failing to keep up to date with them can result in losing your company, and expensive legal fees.\u00a0<\/span><\/p>\n

Understanding Your Annual Return Obligations<\/span><\/h2>\n

Your Annual Return will commonly be a two-step process: first your Shareholders and Directors sign Shareholder, Director and Auditor Resolutions, acknowledging important things such as:\u00a0<\/span><\/p>\n